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TEU present

- The State of Michigan fully supports this effort. Protecting the integrity of

Michigan’s unemployment insurance program is of the utmost importance to

the Unemployment Insurance Agency (UIA).

- The UIA and Director Steve Arwood are taking this project very seriously

and are moving expeditiously to launch the State of Michigan’s own

campaign dedicated to the early detection and prevention of fraudulent

activity.

- With this initiative, the UIA is focusing its energy and resources on

identifying, maintaining, and improving the integrity of the entire Michigan UI

system.

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Benefit Fraud

- Mention that this is your unit, which handles the prosecution referrals or

cases that need field work.

- Explain that this is the reason why we all own integrity. We are very

excited about this project and are asking for your assistance with full

implementation of our Everybody Owns Integrity Initiative. We believe the best

way to address this problem is through a cooperative effort between the UIA

and the employer community!

-Use example below if necessary:

Example: 80% of the claimants are in survival mode. Some may have lost

high paying jobs and now are forced to live on unemployment. They wouldn’t

normally commit the crime, but are in survival mode. It doesn’t excuse their

actions, but it does put them in a very bad position.

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TEU

- Claimant and employer

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Benefit Fraud

MARVIN – Michigan’s Automated Response Voice Interactive Network

-Use examples below if necessary:

Example for working FT while collecting benefits:

Explain that MARVIN asks claimants three pertinent questions: Are you back

to work full time? Did you have any earnings during the weeks you are

claiming? And, most importantly, did you perform any type of work during the

weeks you are claiming?

Using another person’s ID: Indicate that identity theft is on the rise in all

programs administered by the state.

Example for providing false info:

Indicate that quitting and being fired are gray areas as they are open to

individual’s perception of whether they quit or were fired, but if they say they

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were laid off and clearly they were not, then that could be fraud.

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- Employer = Individuals or businesses that deal in cash only or use other

schemes to hide their activities and their true tax liability such as…

- Questions Re: misclassification please refer to IRS 20 Factor Test (starts in

2013) which will be discussed in the afternoon session.

Examples:

Providing false info:

Layoff an employee-the employee then files for benefits, then you state

the employee was fired for misconduct.

Under the table:

Pay in cash or gift cards.

Incorrectly reporting wages:

Under or over reporting wages on 1017

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Misrepresentation/disc. of family ownership:

You and your spouse have 50% ownership in a corporation. The

corporation is doing well financially, then there is an economic

downturn, the wife files for benefits and does not indicate she had 50%

ownership in the business.

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Benefit Fraud

- Point out that the campaign is being launched to raise public awareness

about the high price we all pay for UI Fraud and the importance of reporting it.

Employers will soon be hearing and seeing:

• Billboard announcements

• Radio announcements

• Public news releases

- TEU - This taskforce is made up of front-line UIA employees. Their

assignment is to thoroughly review current UIA policies and

procedures, identify weaknesses and areas where they may be

compromised, and provide suggestions for improvements. Manager of

TEU serves on this committee.

- NDNH – Employer database mandated by the Federal Government, initially

used to assist Child Support agencies in locating parents that have not paid

or are behind in child support payments. UIA uses the database to

crossmatch this information with new claims as a detection tool to curb

potential overpayments.

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Example: Direct employers to the website and inform them that it is

important to register new hires either online or in writing. That this not

only helps catch mothers and fathers that don’t pay child support, but

helps our Agency catch those that might have a new job. Explain that

prior to this automation, we had to have a case in our hands and

manually search this database to see if they were working somewhere.

Sometimes we don’t know they are working for XYZ company until after

that company reports their quarterly wages, but now with the new

crossmatch, their social security number should come up as a hit that

they are collecting.

- Wage/Benefit – Employers weekly wage breakdown and claimant’s

response to request for explanation of benefits received, are compared to

determine eligibility.

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Benefit Fraud

- Base Period Wage Verification – currently under development. Automated

requests to be mailed to employers to confirm any dates of employment and

wages listed for a base period that were not previously listed.

Example: Base Period Wage Verification helps in two ways:

1. If there are no starting or ending dates for an employee listed in the

base period, then the Agency automatically sends a letter to that

employer asking them to supply that information. This would show if

they worked while drawing benefits.

2. In the past, a claimant was able to provide the Agency with wages.

The Agency would then send a letter to the employer asking if those

wages are correct. If the employer failed to respond, then the Agency

would take the Claimant’s word and enter the Claim. Now, if the

Claimant provides wages, the Agency does not open a claim right away

and requests that the Claimant provide sufficient proof such as check

stubs which would show that they made that money.

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Further explain that this should help curb the fictitious employer

schemes as they can no longer make up wages. Indicate that this has

recently taken effect.

- Deceased Claimant Crossmatch – UIA entered into an agreement with the

Michigan Dept. of Community Health to crossmatch active claimant records

against State Death Certificates on a quarterly basis (estimated to start by

end of 1st Qtr. 2012)

- Claimant Messaging Initiative – Problem Resolution Offices are now

equipped to show educational videos on fraud prevention and ways to avoid

overpayments. In addition claimants and employers are being educated via

billboards, bus advertisement, public service announcements, radios ads,

internet ads, fact sheets, and news articles about the consequence of fraud

and how to detect and prevent fraud.

- With regard to the bullets about investigations, Attorney General and

assessing penalties, etc:

Discuss the partnership with the Attorney General’s office regarding

more complex crimes. These crimes might involve more than one

individual and more than one crime such as welfare, id theft, etc. In a

situation as this, charges could be stacked and individuals could be

charged with racketeering, a 20-year felony. This packs more power to

our punch.

Also mention that receiving $3,500 in benefits fraudulently is a felony.

Example: in Ingham County, it takes four months to get a

warrant issued because it was a misdemeanor, which goes to the

bottom of the stack. For a felony, a warrant can be issued immediately.

It also helps with local law enforcement in that they are more willing to

work with us to pick up suspects accused of a felony than those

accused of a misdemeanor.

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TEU

The Agency would like to ask for your help with preventing and detecting fraud.

- UIA 1136 – Statement of Unemployment Benefits Charged or Credited to

Employer’s Account.

- If an employer believes the worker was ineligible for benefits, a

written protest to Form UIA 1136 must be received by the UIA within

30 days from the date it was mailed. (see UIA 1136 from earlier

presentation)

- UIA 1770 – Summary of Statement of Benefit Charges and Credits

- UIA 1770 can also be protested within 30 days from the date it was

mailed, but only the calculation of charges to the employer’s account

can be protested (see attached UIA 1770 example)

- UIA 1028 – Quarterly Tax Report- combined 1020 with 1017 – to be

finalized soon

- The SSA offers employers and authorized reporting agents several methods

for verifying employees’ SSNs.

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TEU

- When an individual’s employment ends with you for any reason, be sure to

keep detailed records so you can respond to UIA notices, telephone calls,

and investigations.

- Retain employment records for 6 years as per the MES Act.

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Benefit Fraud

Example: Employers should carefully review 1136, Statement of

Unemployment Benefits Charged or Credited to Employer’s Account. More

specifically, look to see if the employee is reporting any wages to the UIA. If

they see “0” wages reported, and they know they are working somewhere or

are back to work for them, then they should report it to the Agency.

They can report by phone or online, and also explain that being detailed with

their report is very important.

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